New York Times: Nike Pledges to End Child Labor And Apply U.S. Rules Abroad

by John H. Cushman Jr. , The New York TimesMay 13th, 1998

Bowing to pressure from critics who have tried to turn its famous shoe brand into a synonym for exploitation, Nike Inc. promised today to root out underage workers and require overseas manufacturers of its wares to meet strict United States health and safety standards.

Philip H. Knight, Nike's chairman and chief executive, also agreed to a demand that the company has long resisted, pledging to allow outsiders from labor and human rights groups to join the independent auditors who inspect the factories in Asia, interviewing workers and assessing working conditions.

"We believe that these are practices which the conscientious, good companies will follow in the 21st century," he said in a speech here at the National Press Club. "These moves do more than just set industry standards. They reflect who we are as a company."

Nike said it would raise the minimum age for hiring new workers at shoe factories to 18 and the minimum for new workers at other plants to 16, in countries where it is common for 14-year-olds to hold such jobs. It will not require the dismissal of underage workers already in place.

Footwear factories have heavier machinery and use more dangerous raw material, including solvents that cause toxic air pollution. At overseas factories that produce Nike shoes, the company said, it would tighten air-quality controls to insure that the air breathed by workers meets the same standards enforced by the United States Occupational Safety and Health Administration at home.

Mr. Knight's pledges did not include increased wage, a major complaint of critics who say that Nike and other American companies pay workers in China and Vietnam less than $2 a day and workers in Indonesia less than $1 a day. (A 1996 World Bank report concluded that more than one-fifth of the world's population lives on less than $1 a day.) Still, even with much lower prices in these countries, critics say workers need to make at least $3 a day to achieve adequate living standards.

Nike, in a statement today, cited a report it commissioned in 1997, which said that its factories in Indonesia and Vietnam pay legal minimum wages and more.

In his speech today, Mr. Knight defended Nike's record of creating jobs and improving factory conditions abroad, but seemed to acknowledge that it was time for drastic action. "The Nike product has become synonymous with slave wages, forced overtime and arbitrary abuse," he said. "I truly believe that the American consumer does not want to buy products made in abusive conditions."

The initiatives announced today address the types of issues, like air quality, that were raised by an inspection report prepared for the company by Ernst & Young, the accounting and consulting firm. The report, which found many unsafe conditions at a plant in Vietnam, gained force when it was made public by the Transnational Resource and Action Center, a nonprofit group that often criticizes conditions at American factories overseas.

Critics of Nike responded favorably to many elements of the plan released today, while noting that Mr. Knight had not promised to increase pay. They cautioned that he had not detailed which groups would be allowed to take part in the monitoring of factories or provided other details on that part of his commitment.

"Independent monitoring is a critical element of an overall system of improving labor practices," Mr. Knight said. "Nike's goal is to reach a point where labor practices can be tested and verified in much the same manner that financial audits determine a company's compliance with generally accepted accounting principles."

Monitoring labor standards abroad has divided industry members of a committee established by the White House to consider such standards of American corporations, preventing it for the past year from coming up with recommendations.

Jeffrey D. Ballinger, director of Press for Change, a group that has been critical of Nike, called the company's plan a major retreat and a sign of the critics' growing strength.

"I think on the health and safety question, it is a very significant statement," he said. "There is not a lot of wiggle room. They either fix it or they don't. I really, really believe they are going to get after that problem."

The company has been hurt by falling stock prices and weak sales even as it has been pummeled in the public relations arena, including ridicule in the comic strip Doonesbury and an encounter between Mr. Knight and the gadfly film maker Michael Moore in his new documentary, "The Big One."

Mr. Knight said the main causes of the company's falling sales were the financial crisis in Asia, where the company had been expanding sales aggressively, and its failure to recognize a shifting consumer preference for hiking shoes.

"I truthfully don't think that there has been a material impact on Nike sales by the human rights attacks," he said, citing the company's marketing studies.

But for months, the company, which spends huge sums for advertising and endorsements by big-name athletes, has responded increasingly forcefully to complaints about its employment practices, as student groups have demanded that universities doing business with Nike hold it to higher standards. In January, it hired a former Microsoft executive to be vice president for corporate and social responsibility.

Other critics, such as Thuyen Nguyen, director of Vietnam Labor Watch, were critical when the civil rights figure Andrew Young reported favorably last year on the company's efforts to improve conditions in its Asian factories, saying that he had glossed over problems.

Mr. Knight emphasized today that using objective observers to monitor working conditions would serve not just Nike, but eventually American industry in general, by "giving the American consumer an assurance that those products are made under good conditions."

Some critics, though, stressed that the company could not reassure consumers without improving wages in its factories.

"We see one big gap," said Medea Benjamin, director of the San Francisco-based human rights group Global Exchange. "A sweatshop is a sweatshop is a sweatshop unless you start paying a living wage. That would be $3 a day."

GRAPHIC: Photos: Nike's chief, Philip H. Knight, discussing company labor practices yesterday. (Associated Press)(pg. D1); A woman working on a factory line making Nike products in Vietnam. The American footwear maker has come under heavy attack for the health and safety standards it allows and the amount it pays workers abroad. (Dara O'Rourke)(pg. D5)

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